Correlation Between Employers Holdings and Perseus Mining

Can any of the company-specific risk be diversified away by investing in both Employers Holdings and Perseus Mining at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Employers Holdings and Perseus Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Employers Holdings and Perseus Mining Limited, you can compare the effects of market volatilities on Employers Holdings and Perseus Mining and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Employers Holdings with a short position of Perseus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Employers Holdings and Perseus Mining.

Diversification Opportunities for Employers Holdings and Perseus Mining

-0.53

Correlation Coefficient

Employers Holdings  Perseus Mining

Excellent diversification

The 3 months correlation between Employers and Perseus is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Employers Holdings and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining and Employers Holdings is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Employers Holdings are associated (or correlated) with Perseus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perseus Mining has no effect on the direction of Employers Holdings i.e., Employers Holdings and Perseus Mining go up and down completely randomly.

Pair Corralation between Employers Holdings and Perseus Mining

Considering the 90-day investment horizon Employers Holdings is expected to under-perform the Perseus Mining. But the stock apears to be less risky and, when comparing its historical volatility, Employers Holdings is 2.22 times less risky than Perseus Mining. The stock trades about -0.14 of its potential returns per unit of risk. The Perseus Mining Limited is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  168.00  in Perseus Mining Limited on September 21, 2024 and sell it today you would lose (5.00) from holding Perseus Mining Limited or give up 2.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Employers Holdings  vs.  Perseus Mining Limited

Employers Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Employers Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward indicators, Employers Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Perseus Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perseus Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Employers Holdings and Perseus Mining

The main advantage of trading using opposite Employers Holdings and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Employers Holdings position performs unexpectedly, Perseus Mining can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Perseus Mining will offset losses from the drop in Perseus Mining's long position.

The idea behind Employers Holdings and Perseus Mining Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.